The genetic basis of development and differentiation are the major focus of the Unit of Molecular Embryology. The mammalian kidney is used as a model system to examine the complex morphogenetic events leading to the formation of a multi-cellular organ and to understand aberrant developmental processes that lead to oncogenic transformation. Present lines of experimentation focus on the Pax-2 gene, a transcription factor expressed shortly after induction of the kidney mesenchyme, active during the mesenchyme to epithelium transition, and subsequently down regulated in terminally differentiated cells derived from the mesenchyme. Pax-2 is also highly expressed in human Wilms' tumor, an embryonic tumor of the kidney, and in adult renal adenocarcinoma. Down regulation of Pax-2 during normal kidney development may be controlled by the Wilms' tumor suppressor gene, WT1, which can bind 5' Pax-2 sequences with high affinity. Experiments in transgenic mice indicate that persistent expression of Pax-2, under the control of a heterologous promotor, results in severe renal abnormalities similar to congenital nephrotic syndrome. Thus, suppression of Pax-2 is a requirement for proper kidney development, and failure to suppress, due to deletions or mutations in WT1, may be a determinant of oncogenesis. Current studies focus on the function of Pax-2 proteins and the identification of DNA binding sites and potential target genes. The signal transduction events leading to Pax-2 transcription activation are also under investigation, particularly the role of receptor tyrosine kinases. Lastly, the function of Pax-2 in the developing central nervous system in being addressed through the analysis of mutant mice that exhibit aberrant expression domains and through in vitro culture models. By the analysis of a multi-functional regulatory factor such as Pax-2, more general mechanisms underlying embryonic development and oncogenic transformation may be deciphered.